The card is a thin block of aluminum, with your name laser engraved on top. There are no credit card numbers, CCV codes, or signatures. This card was born in Cupertino – and that detail goes against a smooth design.
This is Apple Card: the Apple credit card is released as a tangible credit card and a virtual card inside Apple Pay, in conjunction with Goldman Sachs and Mastercard. Published at yesterday's live event in Cupertino and published this summer, Apple Card marks a strategic change for the technology company: Don't just sell brand new gadgets to consumers; sell them attractive credit lines, too.
In terms of Apple Card features, some are great – like no annual fees or late fees on payments. Similarly, interest rates will not increase with missed payments, and Apple and its partners have agreed not to sell your spending data. Others are fine, like 2% back on purchases, and 3% back on Apple purchases. Interest rates will vary from 13.24% to 24.24% (based on your personal credit score set at the end of the March Federal reserve). But this is Apple. Not only does it promise you any credit card. We promise a credit card “to be designed for a healthier financial life,” according to Jennifer Bailey, Apple's VP Pay. As such, the card offers all sorts of useful visual metrics designed by Apple to help keep your spending clear. Our problem is crucial in 2019. We are on the edge of a recession. As many 41.2% of Americans have an average $ 5,700 in credit card debt and less than half the Americans have the money on hand to pay a $ 1,000 emergency.
But can UX design and Apple's service change the way people actually use their credit cards? To answer this question, I spoke to David Gal, a marketing teacher at the University of Illinois in Chicago and an expert on behavioral economics. (I also spoke to a credit industry caller, on the state of anonymity.) According to Gal, the Apple Card has some positive and some ugly ideas. But in the end, it probably won't make a dramatic difference in the way any of us spends money. This is why Apple can't even revolutionize this product genre.
In terms of money, behavior is difficult to change
One of the main features of the Apple Card is that it is very transparent in how we display and manage expenditure data. An algorithm runs on the phone to sort your spending into clear categories, coded with color, cutting down your spending into a beautiful gradient bar graph. Your monthly payments look something like inverse fitness goals on the Apple Watch. By dragging your thumb around these bright circles, you can tune your full monthly payment to a partial payment with interest bearing. As you go, several appear inside the circle, noting in dollars what you will pay as a result.
These tools are clear, tidy, and useful – the types of analyzes you could pull up and understand in a few seconds. However, Gal suddenly points out that they are not completely new. Banks and credit card companies have been creating similar graphics for a decade. It may not be as obvious as Apple, but it has happened, and it did not really affect the bottom line of consumer credit. “Consumer habits are an integral part,” said Gal. “I don't think there is much evidence that changing the interface. . . are going to have a clear effect on users of their motivation to pay off debts. ”
For example, Gal refers to the switch from paper billing to digital, which made it easier to pay credit card bills – but it did not change significantly how people used their credit cards. “Credit companies were very concerned that people will know more when they should pay,” he said. “Credit card companies do a lot in late fees. However, this has had little impact on consumer behavior. In other words, easy-to-use credit management did not make debt less of a problem for people yet, so Gal is suspicious that Apple Card – no matter how easy and intuitive the UX is.
Will the Apple Card feel like a debt subscription service?
Apple did no consumer studies in determining Apple Card's behavior design. Instead, its decisions are based on common sense, they may not make much sense when you're researching consumer psychology. For example, the Apple Card will pay consumers a 2% reward on all their daily purchases rather than making consumers wait for a month for a more money-back award like lots of credit cards. At first glance, this is a pro-consumer decision: Give someone money back immediately because this is the right thing to do. But look at reward science, and you'll find that short-term awards are very stimulating in driving behavior.
That is, this feature could encourage Apple Card users to spend more often by rewarding them more often at a time that all of us should probably be saving our money. Gal believes that there is some validity to the argument that the Apple Card could take people more often by rewarding them frequently. But we believe that giving people small, constant, rather than a large, lump sum could feel meaningless to consumers. “I feel that in some sense a prize is so small, I won't notice,” he said.
Another concern for me is that Apple's Card interface makes it very easy dragging your finger and reducing the amount of your payment. It could be also It's easy to dial your payments, so raising the interest you accumulate?
Along with the regular micro-rewards of the card and the option to pay your balance down at periods of two weeks rather than monthly, I can't help but I wonder if the Apple Card will feel like a subscription service for debt t . Will it feel natural to have some money all the time and to pay a bit of interest – a habit that is known in the industry as a credit that turns? “Credit rotate is the easiest way to make money,” said the caller in the industry, agreeing that Apple Card could ultimately promote ongoing debt. “Late fees are a kind of revenue that makes people feel angry and bad. But interest has been hidden. “In other words, fees make us feel we have been fleeed, but interest can be a quiet, ongoing financial burden.
There is plenty of space for the Apple Card to evolve
If Apple wants to treat its users ethically and promote healthier spending habits, many of the company's designers are able to do it with the Apple Card as the product evolves. Gal points out that balancing short-term spending goals with long-term transparency – which helps consumers understand debt payment – can affect consumer spending for the better.
“My research, and some other experts have recommended in the past, that consumers tend to be motivated by the perception of progress. If consumers feel they could get out of debt, t [you can] break that down to more manageable things to do, ”he said. “Maybe Apple could break it down, if you pay this amount every month, over 20 months, you paid your debt down. If they had some app that showed progress towards paying off debts, that could be useful to consumers. ”
Apple has not de-characterized a feature of such an Apple Card (or Apple Pay) yet, but Apple's easy to imagine doing so in the future. The company could easily transfer the fact that the iPhone and Apple Pay evolve into a highly aware context spending tool (as is Google Pay for Android users) to help users develop behaviors. healthier. To do that, the company will have to resist the temptation and become the only company in the credit industry that doesn't make a big profit from consumer debt. And maybe that's the biggest challenge that Apple has ever faced.